Premier Oil Reports Record Profit and 5 Pence per-Share Dividend
Mar 21st 2013 12:36PM
Updated Mar 21st 2013 12:40PM
LONDON -- The shares of Premier Oil have climbed 1.4% as of 10:30 a.m. EDT after the oil company revealed full-year earnings of $252 million.
The FTSE 250 member, which boasts investments and operations around the Falkland Islands, Indonesia, Norway, Mauritania, and Vietnam, said that post-tax profit had improved 47% last year to score the group's fifth consecutive annual record. Premier also declared a 5 pence per-share dividend, the company's first payout since 1997. The progress was supported by production rising 43% to almost 58,000 barrels of oil a day, which in turn pushed revenues from $837 million to $1,409 million.
Last year Premier spent $268 million on acquisitions and $772 million on development and exploration projects, which pushed net debt from $774 million to $1.1 billion. Premier also reported that its reserves and resources had expanded by 260 million barrels of oil, or 51%, to 773 million barrels of oil.
Simon Lockett, Premier's chief executive, said: "Premier has built a strong asset portfolio which will act as a springboard for significant further growth over the medium term. ... The next three years will see a further transformation of the business as we increase production and generate significantly greater cash flows."
Meanwhile, Premier chairman Welton said, "The Board believes that the payment of a sustainable dividend underlines our confidence in rising cash flows, the strength of our balance sheet and the quality of our asset base." Welton also claimed Premier's share price had "not kept pace with the growth in value of the underlying assets of the business."
Of course, you must decide for yourself whether Welton is right and Premier's share price has some catching up to do. For what it's worth, the company's current 2.1 billion pound market cap is equivalent to less than 12 times 2012 profits. Premier also reckons its production could improve at least a further 13% to more than 65,000 barrels of oil a day during 2013, with a rate of 75,000 barrels achievable toward the end of the year.
Premier's shares have almost tripled since their 2009 low and provide another example of how smart investors can make large sums from quality resources shares.
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